Japan urged Russia to immediately revoke its decision to place the Russian assets of Japan Tobacco International (JTI) under the temporary management of a local company. Tokyo has filed an official diplomatic protest against the measure, which affects one of the largest foreign investors in the Russian tobacco market, The Wall Street Journal reports.
Russian President Vladimir Putin signed a decree on November 5 under which four JTI production subsidiaries were placed under the management of the Russian company Industrial Assets. The decision effectively deprives the Japanese group of operational control over its business in Russia, although formal ownership of the assets is not transferred.
Japanese Finance Minister Satsuki Katayama confirmed that the government had asked Moscow to revoke the measure. She stressed that Tokyo consistently insists that the legitimate interests of Japanese citizens and companies in Russia be protected.
Japan Tobacco is one of the largest cigarette manufacturers in Russia, with a market share of nearly 40%. The company has operated in the country since 1999 through its international subsidiary JTI, which owns brands such as Winston, Camel and Sobranie.
The Russian market is of significant importance to the group’s financial performance. According to Reuters, operations in the country generate approximately 10% of Japan Tobacco’s total revenue and around 25% of its operating profit.
The news triggered a serious reaction on the stock market. Shares in the Japanese manufacturer fell by around 19% during trading in Tokyo on November 6, reflecting investors’ concerns about the future of its Russian operations.
The Japanese government owns approximately 37.55% of Japan Tobacco’s capital, turning the dispute into a direct issue for the state’s financial interests as well.
The company confirmed that it was analyzing the presidential decree and the possible consequences for its operations. Management said it was assessing the available response options, with the protection of employees and other stakeholders among its priorities.
According to Jefferies analysts, a potential permanent loss of access to the Russian market would mean that Japan Tobacco would lose one of its most important sources of profit. They warn that in previous similar cases, compensation for affected foreign investors was often significantly below the value of the business.
Moscow’s decision is part of a broader series of actions against the assets of foreign companies in Russia. In recent months, the local subsidiaries of international groups including Nestlé and Auchan have also been placed under temporary Russian management.
The Kremlin has not given specific reasons for the measure against Japan Tobacco. In previous similar decisions, Russian authorities have linked their actions to the sanctions and policies of countries that Moscow defines as unfriendly.
Relations between Russia and Japan deteriorated significantly after the start of Russia’s invasion of Ukraine in 2022. Tokyo joined international sanctions against Moscow and continues to support Kyiv.
The territorial dispute over the Kuril Islands and the detention of a Japanese journalist in Russia in October are causing additional tensions.
Japanese Economy and Trade Minister Ryosei Akazawa said that the government was closely monitoring the growing number of cases in which Russia assumes temporary management of foreign companies’ assets.
The Japan Tobacco case once again raises the issue of protecting international investments and the political risks facing foreign businesses in Russia. Although the measure is formally described as temporary management, the lack of clarity regarding its duration and the possibility of regaining control creates significant uncertainty for investors.